Netskope Inc

Notes to condensed consolidated Financial Statements

Note 1 - Description of Business

Netskope, Inc. ("Netskope" or the "Company") is a global cybersecurity company that provides security, networking, analytics, and artificial intelligence ("AI") solutions to organizations ranging from some of the world's largest enterprises to mid-sized companies. The Company delivers its offerings through a Software-as-a-Service ("SaaS") business model, selling subscriptions that provide customers access to its platform along with related support services.

The Company was incorporated in Delaware in October 2012. The Company is headquartered in Santa Clara, California, and conducts business worldwide, including North America, South America, Europe, and Asia.

Note 2 - Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and applicable rules and regulations of the Securities and Exchange Commission ("SEC"), regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026 filed with the SEC on March 31, 2026.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, including those of a normal and recurring nature, which are necessary for a fair presentation of the results for the interim period presented. The results of operations for interim periods are not necessarily indicative of results for the full year. The unaudited condensed consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company's fiscal year ends on January 31.

Emerging Growth Company Status

The Company is an emerging growth company ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"). An EGC may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies, including, but not limited to, delayed adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

The Company may take advantage of these exemptions until it is no longer an EGC. The Company will cease to be an EGC upon the earliest to occur of: (i) the first fiscal year following the fifth anniversary of its initial public offering; (ii) the first fiscal year after annual gross revenue is $1.235 billion or more; (iii) the date on which the Company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the date on which the Company qualifies as a "large accelerated filer," as defined in Rule 12b-2 under the Exchange Act, which would occur at the end of any fiscal year in which the market value of the Company’s common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year.

Use of Estimates

Thepreparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed financial statements and accompanying notes. Such estimates include, but are not limited to, the estimation of fair value of Convertible Notes (as defined below), the determination of fair value of the Company's common stock prior to the completion of the initial public offering ("IPO"), stock-based awards, standalone selling price foreach performance obligation, useful lives of intangible assets and property and equipment, the period of benefit for deferred contract acquisition costs for commissions, incremental borrowing rate used to value operating lease liabilities, income taxes including related reserves, and valuation of intangible assets and goodwill. These estimates are based on information available as of the date of the condensed consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions. Actual results may differ from these estimates and such difference could be material to the condensed consolidated financial statements.

Concentration of Risk

Concentration of Credit Risk

Financial instruments that are exposed to the concentration of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable securities, and accounts receivable. Although the Company maintains cash and cash equivalents in multiple financial institutions, the deposits, at times, may exceed federally insured limits. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents, restricted cash, and marketable securities for the amounts reflected on the condensed consolidated balance sheets. The Company's investment policy limits investments to certain types of debt securities issued by the U.S. government, its agencies, and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company has not experienced any credit losses relating to its cash, cash equivalents, restricted cash, or marketable securities.

Concentration of Revenue and Accounts Receivable

The Company's revenue and accounts receivable are derived substantially from the United States, Europe, and Asia and from customers across a multitude of industries. The Company grants credit to customers in the normal course of business. The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make payments. The Company conducts on-going credit evaluations of customers' payment history and current creditworthiness. The allowance is maintained for all accounts deemed to be uncollectible on a specific identification basis. The allowance for credit losses was immaterial as of July 31, 2026 and January 31, 2026.

As of July 31, 2026, there weretwo channel partners that each represented approxi mately 16% of the accounts receivable, net balance. As of January 31, 2026, there wasone channel partner that represented approximately 14% of the accounts receivable, net balance.

No single end customer represented 10% or more of total revenue for thethree and six months ended July 31, 2026 and 2025. Channel partners that represented 10% or more of total revenue for thethree and six months ended July 31, 2026 and 2025 were as follows:

(a) Represented approximately 16% of the accounts receivable, net balance each as of July 31, 2026.

Concentration of Vendor Risk

The Company uses third-party vendors for delivering the Company's SaaS platform. While these services are highly available and designed to be resilient to failure of infrastructure, the Company's services could be significantly impacted if the third-party vendors' services experience certain types of interruptions.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of three months or less at purchase to be cash equivalents. Cash equivalents primarily consist of amounts invested in money market funds, government agency securities, and commercial paper.

Restricted cash consisted of amounts held as collateral in connection with certain facility lease agreements. The Company had restricted cash of $0.3 millionand$1.2 million as of July 31, 2026 and January 31, 2026, respectively, which was included in other assets, noncurrent in the condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash to the total of these amounts shown in the condensed consolidated statements of cash flows (in thousands):

Operating Leases

Supplemental cash flow information related to the Company's operating leases for thesix months ended July 31, 2026 and 2025 were as follows (in thousands):

Convertible Notes

The Company accounts for its 3.75% Convertible Senior Paid in Kind ("PIK") Toggle Notes due in December 2028 (the “2028 Notes”) and 3.00% Convertible Senior PIK Toggle Notes due in 2029 (the “2029 Notes”, collectively referred to as the "Convertible Notes"), at fair value under the fair value option in accordance with Accounting Standards Codification ("ASC") 825, Financial Instruments. The Convertible Notes are remeasured at fair value each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss. Changes in fair value attributable to instrument-specific credit risk are recorded in other comprehensive income (loss) within stockholders' equity (deficit).

Recently Issued Accounting Pronouncements Not Yet Adopted

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU clarifies the threshold entities apply to begin capitalizing costs and removes references to software development project stages. The ASU requires that an entity capitalize software costs when management has authorized and committed to funding the software project and when it is probable that the project will be completed and the software will be used to perform the intended functions, including consideration of whether there is significant development uncertainty. This ASU is effective for the Company beginning February 1, 2028. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about specific expense categories underlying certain income statement expense line items. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This ASU is effective for the Company beginning February 1, 2027 and requires either prospective or retrospective application. The Company is currently evaluating the impact of this ASU on its disclosures.

Note 3 - Fair Value Measurements

The Company classifies its cash equivalents and marketable securities within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.

The Company classifies its Convertible Notes within Level 3 and they are measured at fair value using valuation techniques and require significant management judgment or estimation.

Cash Equivalents and Marketable Securities

The following tables summarize cash equivalents and marketable securities within significant investment categories by level of input within the fair value hierarchy as of July 31, 2026 and January 31, 2026 (in thousands):

There wereno impairment charges due to credit losses during thethree and six months ended July 31, 2026 and 2025.

Valuation Methodology

The Convertible Notes are measured at fair value and are categorized within Level 3 of the fair value hierarchy. The fair value of the Convertible Notes is estimated using a single-scenario lattice approach that incorporates the trading price of the Company's Class A common stock data, risk-free interest rate, and estimated credit spread.

The fair value of the Convertible Notes on their respective issuance dates was the same as the carrying amounts of $401.0 million for the 2028 Notes and $75.0 million for the 2029 Notes.

The following tables summarize the significant quantitative inputs considered in the valuation of Convertible Notes as of July 31, 2026 and January 31, 2026:

The Company did not have transfers between levels of the fair value hierarchy of assets measured at fair value during the periods presented.

Note 4 - Revenue Recognition

Disaggregation of Revenue

Subscription revenue is recognized over time and accou nted for 99% of the Company's total revenue for the three and six months ended July 31, 2026 and 2025, respectively.

The following table summarizes the disaggregation of revenue by geographic area, based on the shipping address of the end customer for contracts through channel partners and direct customers (in thousands):

Revenue from the United States, which was included within the Americas region in the table above, was $95.9 million, $76.4 million, $184.6 million, and $146.7 million during the three months ended July 31, 2026 and 2025, and the six months ended July 31, 2026 and 2025, respectively.

The following table summarizes revenue from contracts through indirect channels, including channel partners and managed service providers, and direct end customers for the periods presented (in thousands):

Deferred Revenue

Deferred revenue consists primarily of payments received and accounts receivable recorded in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period. The amounts of revenue recognized during the three months ended July 31, 2026 and 2025 and the six months ended July 31, 2026 and 2025, that were included in the deferred revenue at the beginning of the period, were $160.2 million, $126.8 million, $347.9 million, and $272.1 million, respectively.

Payments are received from customers based upon contractual billing schedules and accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to the Company's contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced and such amounts have historically not been material.

The following table summarizes the activity of deferred revenue (in thousands):

Remaining Performance Obligations

Remaining performance obligations represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue that has been invoiced and non-cancelable committed amounts that will be invoiced and recognized as revenue in future periods.

As of July 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $1.4 billion. The Company expects to recognize 53% of the remaining performance obligations over the next 12 months and 43% between 13 and 36 months, with the remainder to be recognized thereafter.

Deferred Contract Acquisition Costs

The following table summarizes the activity of deferred contract acquisition costs (in thousands):

Note 5 - Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

Amortization expenses related to acquired intangible assets were$2.7 million and$4.1 million for the three months ended July 31, 2026 and 2025, respectively, and$5.1 million and$10.7 million for the six months ended July 31, 2026 and 2025. As of July 31, 2026 and January 31, 2026, the weighted-average remaining amortization period of the intangible assets was 2.0 years.

The expected future amortization expense for acquired intangible assets as of July 31, 2026 is as follows (in thousands):

Note 6 - Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

Depreciation and amortization expenses were$7.9 million and$7.4 million during the three months ended July 31, 2026 and 2025, respectively, and$15.5 million and$14.8 million during the six months ended July 31, 2026 and 2025, respectively.

Accrued Compensation and Benefits

Accrued compensation and benefits consisted of the following (in thousands):

Note 7 - Commitments and Contingencies

Lease Commitments

Future minimum operating lease payments as of July 31, 2026 were as follows (in thousands):

Legal Matters

In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes, or claims. The Company does not believe that there are any pending or threatened legal proceedings that are likely to have a material adverse effect on its condensed consolidated financial statements, however, the outcomes of litigation and legal matters are inherently unpredictable, and an unfavorable resolution could materially affect the Company's results of operations, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could affect the Company's results of operations.

Indemnification

In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third party claims that the Company's products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the potential amount of liability under these indemnification obligations due to the Company's limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. In addition, the Company indemnifies its officers, directors, and certain key employees while they are serving in good faith in their respective capacities. As of July 31, 2026, there have been no claims under any indemnification provisions and costs and liabilities incurred as a result of indemnification obligations were not material during the periods presented.

Note 8 - Convertible Notes

In September 2025, the Company completed its IPO which qualified as a Qualified Initial Public Offering ("Qualified IPO") as defined in the respective indentures governing the 2028 Notes and the 2029 Notes. As a result, the conversion rate for the 2028 Notes was finalized at 42.1046 shares of Class B common stock per $1,000 principal amount, representing a conversion price of approximately $23.75 per share. The conversion rate for the 2029 Notes was finalized at 40.4858 shares of Class B common stock per $1,000 principal amount, representing a conversion price of approximately $24.70 per share.

2028 Notes

In December 2022, the Company issued $401.0 million of the 2028 Notes under an indenture with U.S. Bank Trust Company, National Association, as trustee. In April 2025, the 2028 Notes were amended to extend the maturity to December 15, 2028, upon a Qualified IPO, to modify the optional repurchase period to 120 -91 days before the new maturity date, and to adjust redemption conditions post-Qualified IPO. The 2028 Notes accrue interest at 3.75% per annum, payable quarterly in cash or PIK at the Company's election, and are convertible into the Company's Class B common stock. The Company may redeem the notes after the one-year anniversary of a Qualified IPO if the stock price exceeds 200% (or 230% post-December 15, 2027) of the conversion price for a specific period unless it is a redemption in connec tion with a change in tax law. Holders may request the Company to repurchase their 2028 Notes with a minimum return of 14.0% compounded quarterly, or upon a fundamental change at a premium of 140% -170% of principal, depending on timing. The Company elected the fair value option under ASC 825.

2029 Notes

In September 2024, the Company issued $75.0 million of the 2029 Notes under an indenture with U.S. Bank Trust Company, National Association, as trustee. The 2029 Notes accrue interest at 3.00% per annum, payable quarterly in cash or PIK, and are convertible into the Company's Class B common stock. Conversion, redemption, and repurchase terms are substantially similar to the 2028 Notes, except for a minimum return of 13.5% compounded quarterly for optional repurchase and a $50.0 million minimum outstanding threshold for partial redemptions. The notes are accounted for under the fair value option.

The change in the fair value of the 2028 Notes and 2029 Notes, and the related impact on the condensed consolidated statement of operations and the condensed consolidated statements of comprehensive loss, are presented below (in thousands):

PIK interest expense included in the fair value changes for the 2028 Notes was $4.3 million and $4.1 million for thethree months ended July 31, 2026 and 2025, respectively, and $8.4 million and $8.1 million for thesix months ended July 31, 2026 and 2025, respectively. For the 2029 Notes, PIK interest expense was $0.6 million and $0.6 million for thethree months ended July 31, 2026 and 2025, respectively, and $1.2 million and $1.1 million for thesix months ended July 31, 2026 and 2025, respectively.

Note 9 - Stockholders' Equity

Common Stock

In connection with the completion of the IPO, the Company amended and restated its certificate of incorporation (the "Charter"), which authorizes three classes of $0.0001 par common stock:3,000,000,000 shares of Class A common stock,600,000,000 shares of Class B common stock, and 1,000,000,000 shares of Class C common stock. The rights of the holders of Class A common stock, Class B common stock, and Class C common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 20 votes per share and is convertible at any time into one share of Class A common stock. Shares of Class C common stock have no voting rights, except as otherwise required by law. Class A and Class B common stock are referred to collectively as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted. Common stockholders are entitled to dividends when and if declared by the board of directors.

Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. Any share of Class B common stock will automatically convert to Class A common stock following the earliest to occur of (i) the sale or transfer of such share of Class B common stock, except for permitted transfers as described in the Charter; (ii) the date specified by the holders of two-thirds of the outstanding shares of Class B common stock; (iii) the last trading day following the tenth anniversary of the effectiveness of the registration statement filed in connection with the Company’s IPO; (iv) the date fixed by the Company’s board of directors that is no less than 61 days and no more than 180 days following the date that Sanjay Beri, the Company's Chief Executive Officer, is no longer providing services to the Company as an officer, employee, consultant, or director; or (v) the date fixed by the board of directors that is no less than 61 days and no more than 180 days following the death or incapacity of Mr. Beri.

Preferred Stock

In connection with the amendment of the Company's certificate of incorporation upon the IPO, the Company authorized the issuance of 300,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors. As of July 31, 2026, there wereno shares of preferred stock issued and outstanding.

Equity Incentive Plans

In 2012, the Company adopted the 2012 Stock Incentive Plan ("2012 Plan"), under which officers, employees, and consultants may be granted awards of options and the award or sale of shares. The options generally vest over four years with 25% of the option shares vestingone year from the service commencement date and then monthly over the following 36 months and expire no more thanten years after the date of grant. Stock that is purchased prior to vesting is subject to the Company's right of repurchase at any time following termination of the participant. Certain awards provided for accelerated vesting if there is a Change in Control (as defined in the 2012 Plan). The board of directors had authorized 127,243,597 shares of common stock to be reserved for grants of awards under the 2012 Plan.

In October 2022, the Company adopted the 2022 Stock Incentive Plan ("2022 Plan"), under which officers, employees, and consultants may be granted awards of options, restricted stock awards, stock appreciation rights, restricted stock units ("RSUs") and other stock awards. The options generally vest over four years with 25% of the option shares vestingone year from the service begin date and then monthly over the following 36 months and expire no more than 10 years after the date of grant. RSUs granted under the 2022 Plan are subject to service-based and performance-based vesting conditions. RSUs generally vest ratably over three tofour years from the vesting commencement date. Certain awards provided for accelerated vesting if there is a Change in Control (as defined in the 2022 Plan). The 2012 Plan was terminated upon the adoption of the 2022 Plan and all remaining shares available for issuance under the 2012 Plan were transferred into the 2022 Plan.

In connection with the IPO, in September 2025, the Company adopted the 2025 Equity Incentive Plan (the "2025 Plan", collectively, with the 2012 Plan and the 2022 Plan, referred to as the "Equity Plans"), under which the Company is authorized to grant awards of options, restricted stock, RSUs, stock appreciation rights, performance awards to employees, directors, and consultants, and the Company's parent and subsidiary corporation's employees and consultants. The 2022 Plan was terminated effective immediately upon the adoption of the 2025 Plan. Under the 2025 Plan, the Company initially reserved 38,210,000 sharesof Class A common stock for issuance. In addition, the number of shares reserved for issuance under the 2025 Plan includes the number of shares of Class A common stock and the number of shares of Class B common stock issuable under the 2012 Plan and 2022 Plan. The number of shares available for issuance under the 2025 Plan also includes an annual increase on the first day of each fiscal year beginning with the Company's 2027 fiscal year, equal to the lesser of: (i)38,210,000 shares of Class A common stock, (ii) five percent (5%) of the outstanding shares of capital stock as of the last day of the immediately preceding fiscal year, or (iii) such other amount as the Company's board of directors may determine. As of July 31, 2026, there were 51,433,295 shares of Class A common stock reserved for future issuance under the 2025 Plan.

RSUs

The grant-date fair value of RSUs with only service-based and performance-based conditions is determined based on the fair value of the Company's common stock on the date of grant. Upon the consummation of the IPO, the performance-based vesting condition for outstanding RSUs was satisfied. As a result, the RSUs that had satisfied the service-based condition as of the IPO date had vested. For the three and six months ended July 31, 2026, the Company recognized $56.6 million and $124.4 million, respectively, of stock-based compensation expense attributable to RSUs, including performance and market-based RSUs. No stock-based compensation expense attributable to RSUs was recognized for thethree and six months ended July 31, 2025 as the performance-based vesting condition had not been satisfied at that time.

As of July 31, 2026, the Company had $410.2 million of unrecognized stock-based compensation related to the RSUs, including the performance and market-based RSUs as further described below. This amount is expected to be recognized over a weighted-average remaining requisite service period of 1.9 years.

Performance and Market-Based RSUs

Performance and market-based RSUs include RSU grants with service-based vesting condition and with performance-based and/or market-based vesting conditions. For awards with performance-based vesting conditions, the Company determined the fair value based on the fair value of the Company's common stock on the date of grant. For awards with market-based vesting conditions, the Company used a Monte Carlo simulation to determine the fair value at the grant date and the implied service period. For the three and six months ended July 31, 2026, the Company recognized $11.9 million and $25.1 million, respectively, of stock-based compensation expense attributable to the performance and market-based RSUs. No stock-based compensation expense attributable to performance and market-based RSUs was recognized for thethree and six months ended July 31, 2025 as the performance-based vesting condition had not been satisfied at that time.

As of July 31, 2026, the Company had unrecognized stock-based compensation related to the performance and market-based RSUs of $53.4 million that is expected to be recognized over a weighted average requisite service period of 1.9 years.

Stock Options

The fair value of stock options under the Company's Equity Plans is determined on the date of grant by utilizing the Black-Scholes option pricing model, which is impacted by the fair value of the Company's common stock. Options granted generally have a maximum term of 10 years from grant date or 90 days from the termination of the optionee, are exercisable upon vesting unless otherwise designated for early exercise by the board of directors at the time of grant, and generally vest over a period of four years. For the three and six months ended July 31, 2026 and 2025, the Company recognized$2.4 million, $7.6 million, $6.2 million, and $17.6 million, respectively, of stock-based compensation expense attributable to stock options. As of July 31, 2026, the Company had 47.0 million stock options outstanding with a weighted-average exercise price of $5.85.

As of July 31, 2026, the Company had $6.5 million of unrecognized stock-based compensation expense related to the stock options that is expected to be recognized over a weighted average requisite service period of 0.7 years.

2025 Employee Stock Purchase Plan

In September 2025, the Company's board of directors adopted, and its stockholders approved, the 2025 Employee Stock Purchase Plan (the "ESPP"), which became effective in connection with the IPO. The ESPP authorized the issuance of shares of common stock pursuant to purchase rights granted to employees. A total of 7,650,000 sharesof the Company's Class A common stock hasbeen reserved initially for future issuance under the ESPP, in addition to any annual automatic evergreen increases in the number of shares of Class A common stock reserved for future issuance under the ESPP.

The ESPP offers employees the option to purchase shares through a series of consecutive 12 month offering periods on each March 1st and September 1st (with two six-month purchase periods during each offering period). The initial offering period under the ESPP will be shorter than 12 months, commencing on October 3, 2025 and ending on August 31, 2026, with the first purchase period commencing on October 3, 2025 and ending on February 28, 2026. Stock-based compensation related to the ESPP is recognized on a straight-line basis over the offering period in accordance with ASC 718.

The price at which Class A common stock is purchased under the ESPP is equal to the lower of (i)85% of the closing trading price per share of the Company's Class A common stock on the first date of an offering period in which a participant is enrolled or (ii)85% of the closing trading price per share on the purchase date, which will occur on the last trading day of each purchase period. For the initial offering period, the fair market value of the Class A common stock on the offering date was $19.00, the price at which the Company's common stock was first sold to the public in the IPO, as specified in the final prospectus for the Company's IPO dated as of September 17, 2025 and filed with the SEC pursuant to the Rule 424(b)(4) on September 18, 2025.

For the three and six months ended July 31, 2026, the Company recognized $3.5 million and $7.8 million, respectively, of stock-based compensation expense attributable to the ESPP. No stock-based compensation expense attributable to the ESPP was recognized for thethree and six months ended July 31, 2025. As of July 31, 2026, the Company had $1.6 million of unrecognized stock-based compensation expense related to the ESPP which is expected to be recognized over a weighted average requisite service period of 0.2 years.

Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation during the periods presented (in thousands):

Note 10 - Segment Information

The Company has asingle reportable segment. The Company's chief operating decision maker ("CODM") is its Chief Executive Officer, and the CODM reviews financial information presented on a condensed consolidated basis for purposes of allocating resources, evaluating financial performance and monitoring budget versus actual results based on net income (loss) that is also reported on the condensed consolidated statements of operations. The significant expenses within net loss on which the CODM relies include those that are reported on the condensed consolidated statements of operations. The measure of the Company'ssingle operating segment assets is reported on the condensed consolidated balance sheets as total assets.

Revenue disaggregation by geography is presented in Note 4, Revenue Recognition. No single country other than the United States represented 10% or more of the Company's total revenue during the three and six months ended July 31, 2026 and 2025.

Long-lived assets, which are comprised of property and equipment, net and operating lease right-of-use assets, by geographic area are summarized as follows (in thousands):

Note 11 - Restructuring Plan

In June 2026, the Company approved a restructuring plan (the "Plan") intended to realign resources as part of the Company's transition to an AI-native business. The Plan resulted in a reduction of the Company's global workforce by approximately 5%.

During the three and six months ended July 31, 2026, the Company recognized restructuring costs of approximately $3.5 million related primarily to employee severance and other termination-related benefits. The execution of the Plan was substantially completed as of July 31, 2026, however, the elimination of certain positions outside of the United States remains subject to extended consultation requirements mandated by local jurisdictions. The Company does not expect any additional restructuring costs associated with these remaining activities to be material.

The following table summarizes the restructuring costs recognized in the condensed consolidated statements of operations for thethree and six months ended July 31, 2026 (in thousands):

The following table summarizes the restructuring liability that is included in accrued expenses and other current liabilities in the condensed consolidated balance sheets (in thousands):

Note 12 - Net Loss Per Share Attributable to Common Stockholders

The Company computes net loss per share utilizing the two-class method required for participating securities. Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential common stock, including stock options, convertible preferred stock, convertible notes, RSUs, and restricted shares, to the extent they are dilutive.

The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both individual and combined basis.

Basic and diluted net loss per share attributable to common stockholders was as follows (in thousands, except share and per share amounts):

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect: